One stroke off the pace overnight on a tightly bunched leaderboard, Wagner took over at the top as he fired a sparkling six-under-par 64 on a sun-splashed day at The Greenbrier's Old White Course.
The 33-year-old Texan, who played the course several times a year when he was a student at nearby Virginia Tech, mixed seven birdies with a lone bogey to post a 14-under total of 196.
"Today my goal was to go out and make as many birdies as I could, and I did that," Wagner told Golf Channel after sinking a 12-foot birdie putt at the par-three last and pumping his right fist in delight.
"Now I've got to take the same attitude into tomorrow."
Fellow American Jimmy Walker, seeking his first victory on the PGA Tour, was alone in second after matching Wagner for the day's best score, storming home with five birdies in the last nine holes.
Swede Jonas Blixt (67) was a further two strokes back at 10 under, a shot better than Australians Steven Bowditch (69) and Matt Jones (66), and American teenager Jordan Spieth (67).
American Matt Every, the 36-hole leader after opening with scores of 69 and 62, tumbled backwards with four bogeys in the first seven holes on the way to a 74 and a five-under total of 205.
RETURN TO FORM
Wagner, co-leader after the opening round, was delighted to maintain his long overdue return to form, having struggled for much of the past year. He came into this week on the back of six missed cuts in his previous seven PGA Tour starts.
"I had a boot camp with my coach about two weekends ago after I missed the cut by about 30 shots at Hartford," he said, referring to last month's Travelers Championship in Connecticut.
"We just got my game kind of back to where it was leading into Hawaii last season and I just feel more comfortable over the ball right now."
Wagner won the most recent of his three PGA Tour titles at the 2012 Sony Open in Hawaii. This year, he has missed 11 cuts on the U.S. circuit without recording a single top-10 in 18 starts.
"It's been over a year now that I have struggled ... luckily I am having a nice week this week," said Wagner, who has regained the ability to shape shots from left-to-right after working hard with his swing coach.
"It's all clicking right now."
Wagner made a fast start to the third round, sinking birdie putts from 10 feet at the first and the third to seize a one-shot lead.
He offset another birdie at the fifth with a bogey at the seventh but picked up his fourth shot of the day at the par-four ninth to reach the turn in three-under 33, one ahead of the chasing pack.
Playing near-flawless golf, Wagner rolled in birdie putts from eight feet at the 10th and from 12 feet at the 12th to move three strokes clear.
He did remarkably well to save par at the 13th where his tee shot struck trees on the right and his ball bounced down into the rough, taking two more strokes to reach the green before sinking a 22-foot putt.
Wagner parred the next four holes before making his seventh birdie of the day at the par-three 18th to stretch his lead to two shots.
(Reporting by Mark Lamport-Stokes in Los Angeles; Editing by Gene Cherry)